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Thursday, February 21 , 2019, 1:05 am | Fair 47º


$1 Billion Haggen Lawsuit Claims Albertsons Sabotage Over Store Rollout

Suit alleges grocery chain misled FTC, attempted elimination of competition after selling 146 stores

Haggen sued Albertsons Tuesday for trying to sabotage its former stores and Haggen’s entry into new markets. The Albertsons on Calle Real in Goleta has rehired some of the former Haggen employees.
Haggen sued Albertsons Tuesday for trying to sabotage its former stores and Haggen’s entry into new markets. The Albertsons on Calle Real in Goleta has rehired some of the former Haggen employees. (Gina Potthoff / Noozhawk photo)

The Haggen saga continued this week when the grocery chain filed a lawsuit against Albertsons, alleging the grocer undermined sales efforts and intentionally provided false retail data for recently sold stores — causing Haggen to unknowingly inflate prices at former Albertsons locations.

Haggen, a Bellingham, Wash.-based chain, filed the complaint on Tuesday in U.S. District Court against Albertsons LLC and Albertsons Holdings LLC, seeking more than $1 billion in damages.

The lawsuit follows Haggen’s recent announcement to close or sell 26 stores in five states, many of them acquired this year as part of the 146 Haggen picked up from AB Acquisition LLC and Safeway Inc., the entity created when Safeway (owner of Vons) merged with Albertsons.

None of the six Santa Barbara County stores are set to close, but Haggen won’t rule out future closures.

Sixteen California stores are on the chopping block.

In the complaint, Haggen alleges Albertsons purposefully sought out the Haggen chain to convince the Federal Trade Commission to allow the merger with Safeway — planning all along to violate terms of the deal by engaging in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor in over 130 local grocery markets in five states.”

Albertons damaged the Haggen brand, the complaint says, coordinating efforts to launch Albertsons advertising campaigns to coincide with Haggen store re-openings, removing store fixtures and inventory Haggen paid for, diverting some inventory to other Albertsons stores and failing to perform routine maintenance on stores and equipment.

Other “malicious and unfair actions” cited included deliberately under-stocking certain inventory at Haggen-acquired stores below ordinary levels so products would be out of stock upon grand openings and overstocking perishable inventory so that Haggen had to throw away significant amounts of paid-for inventory.

Haggen also alleges Albertsons illegally accessed confidential data to gain an unfair competitive advantage.

Since taking over stores, Haggen has struggled to find footing, reducing hours for employees and catching heat — and a class action discrimination lawsuit — after laying off 14 developmentally disabled people working as courtesy clerks at some of six Santa Barbara County stores.

The Albertsons on Calle Real in Goleta rehired some of those developmentally disabled employees last week, according to a store manager, but no other details were available.

Albertsons spokesman Carlos Illingworth confirmed some employees were rehired, noting that claims made in Haggen's lawsuit were "completely without merit."

"We are happy to have these employees back with us and are proud of our long standing history of providing employment to people with diverse backgrounds and abilities," Illingworth said in an email statement.

Last week, Los Angeles-based United Food & Commercial Workers Union Local 770 filed charges against Haggen stores, Albertsons and Vons, claiming the grocery chains failed to fully inform workers about job protections — alleging Haggen had always planned to close stores and lay off employees.

In Haggen’s lawsuit, the chain places all the blame on Albertsons for providing false information and for trying to create a monopoly.

Instead of focusing on succeeding in new markets, the complaint states, “Haggen has had to focus on strategies to recover from Albertsons’ wrongful acts, which include, sadly, Haggen’s efforts to find new jobs for displaced employees who, too, are victims of Albertsons’ actions.

“Albertson’s anti-competitive conduct caused significant damage to Haggen’s image, brand, and ability to build goodwill during its grand openings to the public,” according to the complaint. “Albertson’s unlawful acts destroyed or substantially lessened the economic viability, marketability and competitiveness of the [Haggen] stores, depriving consumers in each of the relevant markets the benefits of substantial competition from a new market entrant.”

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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